Global Chief to Lead Wal-Mart

Mike Duke Named CEO as World's Largest Retailer Steps Up Foreign Expansion

Wal-Mart made the surprise announcement yesterday that Mike Duke, the head of its international division, will replace H. Lee Scott Jr. as chief executive of the world's largest retailer next year as its foreign business continues to grow rapidly in scale and importance.

Duke has led Wal-Mart's foreign operations since September 2005 and oversees operations in more than a dozen countries and global procurement, crucial experience as the Bentonville, Ark.-based retailer that began as a five-and-dime looks overseas to fuel its growth. Duke is also expected to continue Scott's initiative to transform Wal-Mart into a more sustainable business, and he helped lead a meeting last month with 1,000 vendors in China to announce new sourcing standards.

Scott, 59, will remain chairman of the executive committee of the board of directors and will have an advisory role at the company through 2011. Duke, 58, will take over the top job Feb. 1.

"I am looking forward to leading this great company," Duke said in a statement. "Wal-Mart is very well-positioned in today's economy, growing market share and returns, and is more relevant to its customers than ever."

Duke's name has been floated as a possible successor to Scott for several years. He ran Wal-Mart's domestic segment for about two-and-a-half years before moving to the international division. According to a filing with the Securities and Exchange Commission, Scott notified the company last week that he would retire in January, and the board elected Duke to take his place Thursday.

Several industry analysts said that the news was expected eventually, but they were surprised by the timing of the announcement, coming in the middle of the make-or-break holiday shopping season and the stock market's wild ride.

Wal-Mart spokesman David Tovar said the company's board of directors has had an "ongoing and rigorous" succession strategy to develop leaders internally and that the company's recent momentum will make the transition easier. In an internal memo to employees, Wal-Mart board chairman Rob Walton, son of the company's founder, said:

"I think Lee said it best when he told me, 'This is a great job, but you can't do it forever.' "

Wal-Mart also announced that the head of its U.S. stores, Eduardo Castro-Wright, 53, has been named vice chairman of the company, effective immediately. He will retain his current responsibilities and also take over global procurement.

Castro-Wright had also been floated as a possible successor to Scott. But J.P. Morgan analyst Charles Grom said that his skills are still needed in the domestic division and that his promotion could put him in line behind Duke.

For most of its history, Wal-Mart has relied on explosive domestic growth to fuel its record-breaking sales. But as the big-box behemoth saturated small towns and suburbs with its more than 4,000 stores, sales began to stagnate. Wal-Mart found itself the target of heavy criticism from unions that wanted to block it from entering urban areas in recent years. And it floundered in trying to mimic the success of rival Target in discretionary categories such as apparel and home.

Wal-Mart's performance has rebounded over the past year as its low-price message resonates with consumers during this economic downturn. But even when sales lagged at home, Wal-Mart continued to expand internationally. It opened its first foreign store in 1992 in Mexico under a joint-operating agreement and now operates in about a dozen countries in Latin America, Europe and Asia. It plans to enter India next year through another joint-operating venture.